Introduction
When it comes to determining the biggest company in the world, there are many factors to consider. Some might argue that it’s based on revenue, while others might say it’s about market capitalization. But the truth is, both of these metrics can be misleading if not taken into account properly.
Revenue vs Market Capitalization
When most people think about the biggest company in the world, they immediately picture Walmart or Amazon. However, these companies might not actually be the largest based solely on revenue. For example, in 2019, State Grid Corporation of China reported a total revenue of $546.7 billion, which dwarfs both Walmart and Amazon’s combined revenue of $803.6 billion.
However, market capitalization is another way to measure a company’s size. This metric takes into account a company’s stock price and outstanding shares, giving a more accurate representation of a company’s overall value. In this case, Amazon would come out on top with a market capitalization of $1.6 trillion, while Walmart would have a much lower market cap of $398.5 billion in 2019.
Pros and Cons of Each Metric
Both revenue and market capitalization have their pros and cons when it comes to measuring a company’s size. Revenue is a straightforward metric that can be easily calculated and provides a clear picture of how much money a company is making. However, revenue alone doesn’t take into account a company’s profitability or overall financial health.
On the other hand, market capitalization considers a company’s stock price and outstanding shares, giving a more accurate representation of a company’s overall value. However, this metric can be misleading if a company has a high stock price but a low number of outstanding shares. In addition, market capitalization doesn’t take into account a company’s revenue or profitability.
Examples of the Biggest Companies in the World
1. State Grid Corporation of China
As mentioned earlier, State Grid Corporation of China reported a total revenue of $546.7 billion in 2019, making it the largest company based solely on revenue. However, its market capitalization is much lower than that of Amazon or Walmart, due to its lower stock price and fewer outstanding shares.
2. Walmart
Walmart is one of the most recognizable companies in the world, with a total revenue of $803.6 billion in 2019. While this makes it one of the largest companies based on revenue, its market capitalization is much lower than Amazon’s due to its lower stock price and fewer outstanding shares.
3. Amazon
Amazon is perhaps the most well-known company in the world, with a total revenue of $803.6 billion in 2019 and a market capitalization of $1.6 trillion. This makes it the largest company based on both revenue and market capitalization.
4. Berkshire Hathaway
Berkshire Hathaway is another well-known company, with a total revenue of $97.4 billion in 2019 and a market capitalization of $500.6 billion. While this makes it a relatively small company compared to Amazon or State Grid Corporation of China, its profitability and overall financial health make it a top contender when it comes to measuring a company’s true size.
